Double-Tagged for Fees

I apologize for my industry. A lot.

This is one of those cases...

I am with a customer and I am looking over what they are doing now; as in how they process and the fees they pay before I take it over. In the course of the conversation, the customer tells me about how they are paying a lease for a machine. I explain to them how this is unneccessary as there is a way to get a free machine [see: Terminals are Generally Free] if they will sign up for a minimum, which I know they will easily clear as I have already reviewed their monthly numbers. That's when they inform me they pay a minimum.

Let's review that a moment: (Lease) + (Minimum) = Fees Double Tag

How? Simple, but we have to understand the components.

Lease: A monthly fee for a specified term which pays for the usage of a credit card terminal which a business does not own. Example: $48 a month for a terminal for 48 months.

Free Placement Credit Card Terminal: A credit card terminal given to a business to use which the business does not own. Paid for by a Minimum set on the account which is garnered generally from fees that the business would pay anyway. Example: If a business does a $1,000 a month in credit cards, they would generate about $25 in fees for the processor. The processor then gives them a machine to use for the duration of the life of the business as long as the processor gets its $25 Minimum a month in fees.

Account Minimum: A base dollar amount guaranteed to the processor for the usage of a credit card terminal which a business does not own, and is gathered first from processing fees of the account. This generally works hand in hand with a Free Placement Credit Card Terminal to pay for its use.

Confused? Let me say it like this: a business needs one, or the other. Not both. A lease pays for a machine. A minimum pays for a machine. If a business pays for both, they are paying twice for the same thing. Imagine getting an electric bill and a power bill in the same month for the same service. If your business leases a machine, the machine is paid for via the lease. If you add a minimum, then you are guaranteeing you will give them money for a machine that is already paid for via the lease. If you have a Free Placement machine and they put a minimum on your account to cover it, AND try to add a lease, the lease would be there to pay for a paid machine.

Simple Rule: Minimum or a Lease. Not both. And a Minimum should get you the machine for free. Always get a free placement over a lease.

The reason there are all of these double tags is quite simply that the merchant company gets a bonus if you sign a minimum. If a business is doing $10k monthly, then they obviously do more than $1k a month required to get a free placement. However, the merchant company makes a lot more money if they sign you to a lease. The problem is people get greedy. They want both.

They shouldn't get it.